Economic Capital (EC) Meets the Real World

In the last several months, all have witnessed financial market turmoil at a level unprecedented in the post-Depression era. At the same time, many North American life and non life insurers have been implementing EC methods designed to help manage risk and capita levels. Most commonly, these measures are based on estimates of the fair value of assets, liabilities and capital and their volatility. Typically, the measures are performed at a consolidated level across the organization.